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So you want to become a full-time trader
So you want to become a full-time trader
A frequent question from aspiring traders goes something like this: “How do I know the right time to quit my job in order to become a full-time trader?”
In 1981 I started Factor Trading Co., Inc. with less than $80,000 in trading capital. I consider myself lucky that I did not wash out – that providence dealt me a better hand than I probably deserved. But markets are a lot different today than they were in 1981. I can only offer my own opinion as to what a full-time trader needs today to go out on their own.
If you have a good career doing something else, why rush into full-time trading? Earning a supplemental income as a trader is a nice gig.
If you desire to become a full-time trader, following are what I believe to be the minimum conditions.
1. Your trading account should represent profits you have accumulated from the markets, not savings you have taken from some other endeavor.
2. Your account size should be at least three to four times greater than the amount of annual profits you are expecting to make from trading.
3. You should have at least two years of savings in the bank (other than your trading capital) to cover your living expenses. [Note: This condition is waived if your spouse earns enough to cover living expenses or if your family is independently wealthy.] Depending on trading profits to cover living expenses is a very poor place to start.
4. You should have been profitable the last two consecutive years with Calmar and Gain-to-Pain ratios of at least 1.5 to 1.
5. You should have a complete understanding of the trading plan you will begin using.
6. You should assume a 50% chance that your first year will be a losing year.
Also below is our current list of recommended reading.
- Richard Schabacker – Technical Analysis and Stock Market Profits
- Edwards and Magee -Technical Analysis of Stock Trends – Only 6th version or earlier – only first half of the book
- Jack Schwager -Market Wizards series
- Steven Drobny – Inside the House of Money – European version of Market Wizards
- Jack Schwager – Market Sense and Nonsense: How the Markets Really Work (and How They Don’t)
- Nate Silver – The Signal and the Noise: Why So Many Predictions Fail – but Some Don’t
- Nickolas Darvas – How I Made $2,000,000 in the Stock Market
- Peter L Brandt – Diary of a Professional Commodity Trader: Lessons from 21 Weeks of Real Trading
- Anything by Michael Lewis
- Malcom Gladwell – Blink: The Power of Thinking Without Thinking
- Mark Douglas – Trading in the Zone: Master the Market with Confidence, Discipline and a Winning Attitude
- Edward Chancellor – Devil Takes the Hindmost: A History of Financial Speculation
- Brett Steenbarger – The Daily Trading Coach: 101 Lessons for Becoming Your Own Trading Psychologist
- Steve Nison – Japanese Candlestick Charting Techniques
- George Soros – The Alchemy of Finance
- Nassim Taleb – Fooled by Randomness: The Hidden Role of Chance in Life and in the Markets
New to Forex and Futures Markets
Currency Trading for Dummies
Trading Futures for Dummies
Jack Schwager – A Complete Guide to the Futures Market: Fundamental Analysis, Technical Analysis, Trading, Spreads and Options
Factor Membership
Peter Brandt is a 40+ year veteran of trading. Through his Factor Service, members receive:
Trading Commodity Futures with Classical Chart Patterns: A free PDF copy of Peter’s classic out-of-print bookWeekend Update: 10-16 pages full of in-depth chart analysis and charting commentaryAlerts: Detailed information on specific charts as unique opportunities present themselvesMarket Commentaries: Communications on specific topics regarding market speculation and trading distributed periodicallyWebinars: Monthly member-only webinars where Peter speaks about current conditions and fields member questionsKnowledge Center: Fast and easy access to current and archived content from Peter’s extensive library of contentAutomatic notifications: Email and social media notifications are sent out when new content is publishedView your Factor Member options here. You could consider your membership in the Factor Service as just one more trade. If the Factor Service is not of value to you, well, it is just one more trade that did not work. Through the Factor Service I endeavor to alert novice and aspiring traders to the many pitfalls you will face – and to offer advice on overcoming those pitfalls. My goal is to shoot straight on what trading is all about. For more information watch my 30 minute webinar where we cover the Factor service in depth.
I hope you will consider joining the Factor community.
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Stock Market Index – Nasdaq
U.S Stock Market Index – NASDAQ
You can’t keep a good dog down. There are some wonderful traders I follow that have been calling for imminent collapse of the U.S. stock market index. They offer very sound, thoughtful, thorough and persuasive reasons why the U.S. stock market should not be at present levels. They have even doubled down in recent weeks on their bets. The problem is that the U.S. stock market could care less about the thinking these traders hold forth. They will likely be right … eventually. But price is always King.
Personally, I believe the U.S. stock market is in the final blow-off in the bull market that began in early 2009 – but blow-offs can be very rewarding for longs capable of catching the eventual turn in trend. The NASDAQ index is constructing a possible H&S failure pattern on the daily graph – requiring a decisive close above the right shoulder high at 4897. A H&S failure pattern would establish a profit target of 5123.
I am interested in this possible buy signal if I can find a low risk way to play it. H&S failure patterns are not unknown to the NASDAQ Index. In fact, a massive H&S failure pattern was completed on the weekly graph in Jul (see below). If I do not find a spot to buy NASDAQ with less than a 20 or so point risk I will just watch the balloons float away.
Factor Membership
Peter Brandt is a 40+ year veteran of trading. Through his Factor Service, members receive:
Trading Commodity Futures with Classical Chart Patterns: A free PDF copy of Peter’s classic out-of-print bookWeekend Update: 10-16 pages full of in-depth chart analysis and charting commentaryAlerts: Detailed information on specific charts as unique opportunities present themselvesMarket Commentaries: Communications on specific topics regarding market speculation and trading distributed periodicallyWebinars: Monthly member-only webinars where Peter speaks about current conditions and fields member questionsKnowledge Center: Fast and easy access to current and archived content from Peter’s extensive library of contentAutomatic notifications: Email and social media notifications are sent out when new content is publishedView your Factor Member options here. You could consider your membership in the Factor Service as just one more trade. If the Factor Service is not of value to you, well, it is just one more trade that did not work. Through the Factor Service I endeavor to alert novice and aspiring traders to the many pitfalls you will face – and to offer advice on overcoming those pitfalls. My goal is to shoot straight on what trading is all about. For more information watch my 30 minute webinar where we cover the Factor service in depth.
I hope you will consider joining the Factor community.
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Perfect Soybean Oil
Soybean Oil futures
This blog post is relation to the H&S Soybean Oil pattern identified within the post from September 12th https://www.peterlbrandt.com/soybean-oil-next/ The weekly Soybean Oil continuation graph has completed one of the most perfect textbook H&S bottom patterns I have seen in 41 years following futures markets.
Read More
CFTC COT Data – A discussion
CFTC COT Data – A discussion
As a trader, I have gone months and even years paying little attention to the composition of open interest as reported each week by the CFTC’s Commitment of Traders data (COT). I have covered the topic of CFTC COT Data recently, only because a number of markets have experienced all-time record levels of spec long and commercial short positions. In a recent Factor update, I even raised the question of whether the old book on how to interpret COT data might be thrown away – that we might have entered a new and different era. Evidence now indicates that the old book and understanding of CFTC COT data still applies – that record levels of spec longs and commercial shorts is a reason for concern. The charts below show some recent and current markets exhibiting CFTC COT extremes. In the cases of Soybean Oil, Sugar, Gold, Silver, Cotton, Copper and Crude Oil, record COT spec long positions led to significant market sell offs. It should be noted that Soybean Oil, Sugar, Cotton, Coffee and Copper are still at COT extremes, indicating that additional selling pressure is likely. Please do not misunderstand me to be saying that record spec long positions MUST always lead to price declines. This is NOT the case. There have been times in the past when commercials have been forced to capitulate. For example, the monthly Copper chart (bottom chart featured) shows that a COT profile similar to the current profile resulted in an historic advance starting in Sep 2003.
Read MoreA Market Wizards Dialogue
A Market Wizards Dialogue - Jack Schwager - Peter Brandt Interview - Part 1
Below is the first of a three part interview with Jack Schwager Market Wizards author and Peter Brandt CEO and founder of Factor Trading. We sincerely hope you enjoy and receive great value from all of our free content. Read More
Freeport McMoran (FCX) (Trade Idea)
Freeport McMoran (FCX)
The dominant chart construction in the Freeport McMoran stock is the 16-month H&S bottom on the weekly chart. A decisive move and close above $14.70 will be my signal to buy.
Factor Membership
Peter Brandt is a 40+ year veteran of trading. Through his Factor Service, members receive:
Trading Commodity Futures with Classical Chart Patterns: A free PDF copy of Peter’s classic out-of-print bookWeekend Update: 10-16 pages full of in-depth chart analysis and charting commentaryAlerts: Detailed information on specific charts as unique opportunities present themselvesMarket Commentaries: Communications on specific topics regarding market speculation and trading distributed periodicallyWebinars: Monthly member-only webinars where Peter speaks about current conditions and fields member questionsKnowledge Center: Fast and easy access to current and archived content from Peter’s extensive library of contentAutomatic notifications: Email and social media notifications are sent out when new content is publishedView your Factor Member options here. You could consider your membership in the Factor Service as just one more trade. If the Factor Service is not of value to you, well, it is just one more trade that did not work. Through the Factor Service I endeavor to alert novice and aspiring traders to the many pitfalls you will face – and to offer advice on overcoming those pitfalls. My goal is to shoot straight on what trading is all about. For more information watch my 30 minute webinar where we cover the Factor service in depth.
I hope you will consider joining the Factor community.
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Crude Oil – Possibilities
Crude Oil - Possibilities
The possibility of a 15- month H&S bottom on the weekly chart has given way to two very different Crude Oil Possibilities: (1.) An “end-around” the 12-week symmetrical triangle, or (2.) Substantially greater morphing of the chart. I favor the “morphing” option. Under this option, prices could trade back into the mid-$30s. The weekly continuation chart shown is based on a roll-at-first notice date. Read More
October Webinar Recording
October Webinar Recording
This webinar was recorded live October 13, 2016 for members of the Factor Service. We are releasing this month's webinar (one time only) as a public blog post for all to see. More information on the content and discussion points of the webinar can be found below the video. Details regarding the Factor Service can be found near the bottom of this post. Read More
Euro Dollar Forex Pair
Euro Dollar Forex Pair
It is time to take another look at the Euro Dollar Forex Pair from the 30,000 foot level. The quarterly graph displays two prominent features. First, the 6½-year descending triangle top completed in Mar 2015 has an unmet target at .8670. Second, the decline in Mar 2015 found strong support at the 45-year trendline.
Read MorePeter Brandt’s Charting Tool
Peter’s Crypto Coverage
